diff --git a/compiler/packages/babel-plugin-react-compiler/src/HIR/BuildHIR.ts b/compiler/packages/babel-plugin-react-compiler/src/HIR/BuildHIR.ts
index 8f44594c0031..04dab9bd64f2 100644
--- a/compiler/packages/babel-plugin-react-compiler/src/HIR/BuildHIR.ts
+++ b/compiler/packages/babel-plugin-react-compiler/src/HIR/BuildHIR.ts
@@ -3516,6 +3516,22 @@ function lowerJsxElement(
       text = exprPath.node.value;
     } else {
       text = trimJsxText(exprPath.node.value);
+      /*
+       * If the decoded value trimmed to null, the text may still contain
+       * meaningful content that Babel decoded from HTML entity references
+       * (e.g. ` ` → space). In that case, trimming the decoded value
+       * discards the intentional whitespace. Preserve it by trimming the
+       * raw source instead so that the entity reference is retained in the
+       * output JSX and decoded correctly by the standard JSX transform.
+       */
+      if (text === null) {
+        const rawValue = (
+          exprPath.node.extra as {raw?: string} | undefined
+        )?.raw;
+        if (rawValue != null) {
+          text = trimJsxText(rawValue);
+        }
+      }
     }
 
     if (text === null) {
diff --git a/compiler/packages/babel-plugin-react-compiler/src/__tests__/fixtures/compiler/jsx-html-entity-preserved.expect.md b/compiler/packages/babel-plugin-react-compiler/src/__tests__/fixtures/compiler/jsx-html-entity-preserved.expect.md
new file mode 100644
index 000000000000..c85df4b726d8
--- /dev/null
+++ b/compiler/packages/babel-plugin-react-compiler/src/__tests__/fixtures/compiler/jsx-html-entity-preserved.expect.md
@@ -0,0 +1,43 @@
+
+## Input
+
+```javascript
+// Ensure HTML entity references in JSX text (e.g.  ) are preserved after
+// compilation and not stripped as whitespace-only nodes.
+function MyApp() {
+  return (
+    <div>
+      &#32;
+      <span>hello world</span>
+    </div>
+  );
+}
+
+```
+
+## Code
+
+```javascript
+import { c as _c } from "react/compiler-runtime"; // Ensure HTML entity references in JSX text (e.g. &#32;) are preserved after
+// compilation and not stripped as whitespace-only nodes.
+function MyApp() {
+  const $ = _c(1);
+  let t0;
+  if ($[0] === Symbol.for("react.memo_cache_sentinel")) {
+    t0 = (
+      <div>
+        {"&#32;"}
+        <span>hello world</span>
+      </div>
+    );
+    $[0] = t0;
+  } else {
+    t0 = $[0];
+  }
+  return t0;
+}
+
+```
+      
+### Eval output
+(kind: exception) Fixture not implemented
\ No newline at end of file
diff --git a/compiler/packages/babel-plugin-react-compiler/src/__tests__/fixtures/compiler/jsx-html-entity-preserved.js b/compiler/packages/babel-plugin-react-compiler/src/__tests__/fixtures/compiler/jsx-html-entity-preserved.js
new file mode 100644
index 000000000000..ba4f7d05ebe4
--- /dev/null
+++ b/compiler/packages/babel-plugin-react-compiler/src/__tests__/fixtures/compiler/jsx-html-entity-preserved.js
@@ -0,0 +1,10 @@
+// Ensure HTML entity references in JSX text (e.g. &#32;) are preserved after
+// compilation and not stripped as whitespace-only nodes.
+function MyApp() {
+  return (
+    <div>
+      &#32;
+      <span>hello world</span>
+    </div>
+  );
+}